Market Strategies
Investing Strategies
Read the Market Strategies Investing Strategies February 29, 2016 Newsletter in .pdf format – Click Here
February 29, 2016
Market Strategies Newsletter
Sample Issue
Balanced Investing Strategies To
Make Money In Up Or Down Markets
A Publication of Princeton Research, Inc. (www.PrincetonResearch.com)
Contributing Staff: Michael King, Charles Moskowitz
Where To Invest In 2016 Newsletter Covering:
Where to Invest March 2016
Best Stocks To Buy March 2016
Stock Market Investing Strategies
Stock Options Trade Alerts
Options Trading Strategies
How To Trade Options
Over 26% Returns in 2016 YTD
66% Returns in 2015
204% Returns in 2014
NOTE: This is a Sample Issue Only!
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$10,000 Trading Portfolio
Charles Moskowitz Discussion
We have One Open Long Position:
6 BAC March 12 Calls
Funds in Use = $ 378
ANOTHER QUIET WEEK
Week 8 was another quiet one for the options account. We had no closing trades and so the YTD and Funds in use numbers are unchanged. In the larger account we had several good trades that while profitable, were impractical for Options. This was because those trades were in stocks with fairly high volatility and therefore very high options premium. It becomes impractical to buy puts or calls when you are only trading for $1-$3 per share in a $100 stock. If we were to do that by buying an option that has less premium (in the money) we find ourselves in the position of using too much capital and risking a point for point decline if we are wrong on the trade.
On our sole position, BAC March12 calls, we are in at a reasonable price $ .63 and they closed
@ $ .87. The issue for me is that until we get some clarity on the market and interest rates, this one is stuck under some pretty stiff resistance between 12.85 and 13.10. Right now we get almost point for point on the upside, but we are really susceptible to declines right back to the support around $12.25, where these calls trade around $.45.
My contention is that the overall market is up nicely from the double bottom we discussed here last week, but I don’t think we make any meaningful headway until the financials come to the party. If we are to move higher from here we have a clear shot at the 2000 level in the S&P500, but I see no way to do that without the financials participating. Goldman and JPM (with the exception of the Dimon buy) have been lackluster at best. I think that we are more likely to test the multiple closes in the 1920 area before any major headway is to be made.
Another issue for me is politics. We are beginning to get a better view of the field, and it is not pleasant. There are two Democrats who continue to demonize the banks and Wall Street in general and three guys on the other side, who like business but have no real clue on the international stage. This makes the choice the “least bad” actor to lead us. It’s setting up to look like a lose/lose scenario come November. If you note in Mike’s discussion in the Cycles section (page 11)
we are set up for what is usually a seasonal move lower for the markets in the coming weeks. Add “Super Tuesday” to the mix and if things continue to move in the current direction politically I can see a lot of disgusted investors heading to the sidelines at the first sign of weakness that appears. Remember, March comes in like a lion……….CAM
Market Strategies $10,000 Trading Account Trade Table
DATE |
TRADES |
PRICE |
COST |
PROCEEDS |
RESULTS |
02/18 |
Bought 6 BAC March 12 Calls |
0.63 |
378 |
Remember, these trades are based on your participation in the
TEXTING SERVICE TO RECEIVE ALL UPDATES.
Previous closed out trades not listed here may be seen in previous market letters in the
For Free Where To Invest Your Money Now
High Return Investments Trade Alerts
Go To: PrincetonResearch.com/alerts.htm
MARKET Laboratory – Weekly Changes
Prices are copied from Barron’s Weekly and Yahoo Finance and may be incorrect.
| Dow
16,639.97 +247.98 +1.51% |
Nasdaq
4590.47 +86.04 |
S&P 500
1948.05 +30.27 +1.58% |
Transportation
7405.03 +119.08 +1.63% |
Russell 2000
1037.18 +27.17 +2.89% |
Nasdaq100
4235.62 +71.53 +1.72% |
| Gold (spot)
1219.80 -10.60 -0.9% |
Silver
1537.3 -68.4 -4.5% |
Crude
32.78 +3.14 +10.6% |
Heating Oil
106.68 +2.59 +2.5% |
Unleaded Gas
1.2951 +0.0882 +7.3% |
Natural Gas
1.791 -0.076 -4.2% |
| VIX
19.81 -0.72 -3.5% |
Put/Call Ratios
S&P 100 111/100’s +20/100’s |
Put/Call Ratios
CBOE Equity 65/100’s -13/100’s
|
Bonds
165-20 -31 2.64%+0.05% |
10 Yr. Note
130-24 -05 1.77%+0.02%
|
Copper
212.50 +4.45 +2.1% |
| CRB Inflation
Index 161.67 +2.04 +1.3% |
Barron’s* Confidence
67.4 -2.4 |
S&P100
866.94 +9.69 +1.13% |
5 Yr. Note
121-002-042 1.24% +0.01%
|
Dollar
98.09 +1.50 +1.5% |
DJ Utilities
619.03 +0.42 +0.07% |
| AAII
Confidence Index
Long Term Average |
Bullish
31.2% +3.6%
38.74% |
Bearish
31.4% -6.4%
30.30% |
Neutral
37.4% +2.8%
30.96% |
M1 Money Supply
+4.08% Feb 15th |
M-2 Money
Supply +5.54% Feb 15th |
* Component Change in the Confidence Index
M1…all money in hands of the public, Time Deposits Traveler’s Checks, Demand Deposits
M2.. adds Savings and Money Market Accounts both compared with the previous year.
Market Strategies Technical Information
Support/Resistance Levels: SUPPORT RESISTANCE
S&P 500 1911 1960
Dow 16,250 16,763
QQQ 100.10 104.90
Transports 70.48 7487
NASDAQ 4440 4680
$100,000 Trading Portfolio Stock Positions and Trades
Each stock is allocated a theoretical $ 5,000 share of the portfolio unless otherwise indicated.
|
Stock
|
Purchase Price | Purchase Date | Stop/Loss | Price/Date Sold | Profit/
(Loss) |
||
| SCO 20 | 163.92 | 02/26 | |||||
| AA 500 | 8.25 | 02/24 | Sold 5 -$9 Calls | $225 credit | |||
| FB 50 | 103.66 | 02/24 | 108.55 02/26 | $ 244 | |||
| SUN 300 | 29.50 | 02/23 | Sold 3 32.50 Calls | $ 900 credit | |||
| STNG 500 | 6.02 | 02/22 | |||||
| WTW 200 | 14.50 | 02/19 | 15.04 02/24 | $ 108 | |||
| HMY 1000 | 2.55 | 02/18 | 3.06 02/26 | $ 510 | |||
| SCO 20 | 175.18 | 02.18 | 183.49 02/19 | $ 166.20 | |||
| FB 50 | 103.66
covered |
02/24 | 105.71 Sold Short | $ 205 | |||
| SIG 50 | 97.62
covered |
02/24 | 103.66 Sold Short | $ 302 | |||
| KRO 800 | 5.13 | 01/04 | |||||
| EYES 1000 | 6.49 | 12/28 | |||||
| APC 100 | 51.21 | 12/10 | |||||
| VA 200 | 36.50 | 12/08 | |||||
| APC 100 | 53.53 | 12/07 | |||||
| LVLT 100 | 50.81 | 11/23 | |||||
| TWTR 200 | 28.51 | 10/28 | |||||
| CUBA 500 | 7.58 | 09/28 | |||||
| MOS 100 | 43.55 | 08/14 | |||||
| NBGGY 600 | 1.40 | 02/17 | |||||
| BAC. Wts 5,000 lots | 0.7411 | 12/26 | |||||
| BSBR 500
500 |
4.84
3.75 |
12/18
|
|||||
| SAN 600 | 8.40 | 12/16 | |||||
| AA 500 | 14.21 | 10/16 | |||||
| NBGGY 300 | 2.95 | 05/19 | |||||
| NBGGY 300 | 4.08 | 8/12 | |||||
| TEXQY* 200 | 6.56 | 7/11 | |||||
| REPR* 5000 | 0.22 | 10/22/12 | |||||
Remember, these trades are based on your participation in the
TEXTING SERVICE TO RECEIVE ALL UPDATES.
Previous closed out trades not listed here may be seen in previous market letters in the
For Free Where To Invest Your Money Now
High Return Investments Trade Alerts
Go To: PrincetonResearch.com/alerts.htm
For those of you who do not buy puts to protect your portfolio, there are many ETF’s that are the inverse of the DOW. The symbols are DOG, DXD, SDS,TZA and RWM, which go up when the DOW, S&P 500 and Russell 2000 go down and down when they go up. The DZZ goes up double when gold goes down.
Market Strategies $100,000 Trading Account
There were no closed out option positions:
There were five closed stock positions:
The 50 shares sold short of SIG made $ 302.
The 50 FB short was covered at 105.71 making $ 205
Then 50 shares were also bought at 103.66 and sold at 108.55 gaining $ 244.
The WTW made a profit of $ 108.
The net result was a weekly gain of $ 1369.
For the entire year on closed out trades, our profits increased to $ 6,759.
The Alcoa $9 calls were written against the 5 00 long AA while 3 June SUN $ 32.50 Calls were also written for a credit of $ 900.
The options expire on the third Friday of each Month unless otherwise posted.
The Stock table has the following 25 positions:
AA(2), APC(2), BAC.B.WS, BSBR( 2 ), CUBA, EYES, KRO, LVLT, MOS,
NBGGY (3), REPR, SAN, SCO, STNG, SUN, TEXQY, TWTR, VA Short 5 AA Calls and 3 SUN Calls
The options call for a $ 2,500 investment unless otherwise stated; each stock position requires $5,000 unless otherwise mentioned specifically.
We are basing money management on a hypothetical $ 100,000 and are using a total of
$ 92,066 for the 23 open long stock positions plus a credit of $ 1125 for the AA and SUN written Calls. There is one long option position requiring $ 756 which totals a requirement of $ 91,697
The 23 long positions total $ 72,161, The written Call positions provided an $ 1125 credit which reduces the margin requirement to $ 90, 572, and leaves $ 9,428 in cash.
These figures are approximate and there might be errors.
We have not counted the dividends received from many previous trades such as Apple, Colgate Palmolive, JP Morgan, North American Tankers, Santander, their Brazil affiliate BSBR and Blue Capital Reinsurance which was sold for a profit and many others. We will begin adding them soon.
Executions that have occurred at or near the open or close of trading sometimes vary from our actual numbers. For example, when something opens down and it is through our price, we take the next trade whether it is an uptick or continues lower. This sometimes results in a 50% trade that is slightly above or below the exact number.
Previous Week’s Recommendations and
Rules for the Market Strategies
$100,000 Portfolio Trading Account
- All options count for about $ 2,500.00 for model portfolio calculations unless
otherwise stated
- When the option has doubled sell half the position
- Stop Loss protection is either half or offered with each trade
- The cost of the option is the asking price (or the price between the bid and ask,
whichever is more realistic)
- The options will be followed until closed out.
- Option Symbols are stock symbol with expiration month and strike price
| Option | COST | Date | Sold | Date | Profit/
(Loss) |
| AA March 9 | Calls | 0.45 | 02/26/2016 | $ 225 credit
Covered write |
|
| SUN Mar 27.50
3 lots |
Puts
0.95 |
02/23/16 | |||
| SUN June 32.50
3 lots |
Calls
|
3.00 | 02/23/2016 | $ 900 credit
Covered write |
|
| BAC March 12 12 lots | Calls
0.63 |
02/18/16 |
Remember, these trades are based on your participation in the
TEXTING SERVICE TO RECEIVE ALL UPDATES.
Previous closed out trades not listed here may be seen in previous market letters in the
For Free Where To Invest Your Money Now
High Return Investments Trade Alerts
Go To: PrincetonResearch.com/alerts.htm
This Weeks’ Economic Numbers
Earnings Releases and Media Data
Before the Open on top of the Row;
After the close below the Economics Information
| MONDAY | Endo Int’l ENDP ( 1.27 vs 1.16 ) Global Partners GLP ( -0.09 vs 0.93 ) Magellan Health MGLN ( 1.03 vs 0.82 ) NRG Energy NRG ( -0.23 vs -0.37 ) Valeant Pharma VRX 2.62 vs 2.58
09:45 hrs Chicago PMI February ( 52.0 vs 55.6 ) 10:00 hrs Pending Home Sales January ( +0.7% vs + 0.1% ) Fed Vice Chairman Stanley Fischer speaks before the National Association for Business Economics meeting. Diplomat Pharmacy DPLO ( 0.20 vs 0.08 Hertz Global HTZ 0.05 Orbital ATK OA ( 1.10 ) Tutor Perini TPC ( 0.14 vs 0.56 ) Seaspan SSW ( 0.30 vs 0.27 ) Trinet TNET ( 0.31 vs 0.26 ) |
| TUESDAY | AutoZone AZO ( 7.29 vs 6.51 ) Bank of Nova Scotia BNS ( 1.42 vs 1.35 ) Dollar Tree DLTR
( 1.07 vs 1.16 ) JD.com JD ( -0.12 vs -0.04 ) Jinko Solar Holding JKS ( 1.36 vs 1.24) Medtronic MDT ( 1.06 vs 1.01 ) SunOpta STKL ( 0.05 vs 0.06 ) 10:00 hrs Construction Spending Jan ( +0.5% vs + 0.1% ) ) 10:00 hrs ISM Index Feb ( 49.0 vs 48.2 ) Merrill Lynch sees it inching lower on a month of deteriorating manufacturing conditions amid a strong dollar and a sluggish global backdrop. 14:00 hrs Auto Sales Feb ( NA vs 5.54 Mln Units ) 14:00 hrs Truck Sales Feb ( NA vs 8.62 Mln Units ) Ascena Retail Group ASNA ( -0.01 vs 0.07 ) Ross Stores ROST ( 0.64 vs 1.20 ) |
| WEDNESDAY | Abercrombie & Fitch ANF ( 0.99 vs 1.15 ) Amedisys AMED ( 0.35 vs 0.27 ) Brown-Forman BF.B ( 0.94 vs 0.87 ) InterXion INXN ( 0.15 vs 0.10 ) Snyder’s-Lance LNCE ( 0.32 vs 0.30 )
07:00 hrs MBA Mortgage Index 02/27 ( NA vs -4.3% ) 08:15 hrs ADP Employment Change Feb ( 190K vs 205K ) 10:30 hrs Crude Inventories 02/27 ( NA vs 3.502 Mln Bbls ) 14:00 hrs Fed’s Beige Book March ( NA ) regional economic conditions American Eagle AEO ( 0.42 vs 0.36 ) Costco COST ( 1.29 vs 1.35 ) Greif GEF ( 0.32 vs 0.30 ) Goldman Sachs BDC GSBD ( 0.52 ) Trinseo TSE ( 1.07 vs -0.48 ) |
| THURSDAY | Barnes & Noble BKS ( 1.03 vs 0.93 ) Burlington Stores BURL ( 1.46 vs 1.43 ) Joy Global JOY
( -0.13 vs 0.25 ) Kroger KR ( 0.54 vs 1.04 ) Navistar NAV ( -0.68 vs -0.52 ) Osiris Therapeutics OSIR ( 0.06 ) Tech Data TECD ( 2.08 vs 1.96 ) Trina Solar TSL ( 0.28 vs 0.13 ) 07:30 hrs Challenger Job Cuts Feb ( NA vs 41.6% ) The Senate Banking committee examines regulatory reforms to improve the equity market structure 08:30 hrs Initial Claims 02/27 ( 270K vs 272K ) 08:30 hrs Continuing Claims 02/27 ( 2258K vs 2253K ) 08:30 hrs Productivity-Rev 4th Qtr ( -3.3% vs -3.0% ) 08:30 hrs Unit Labor Costs-Rev 4th Qtr ( +4.7% vs +4.5% ) 10:00 hrs Factory Orders Jan ( +2.0% vs -2.9% ) 10:00 hrs ISM Services Feb ( 53.1 vs 53.5 ) 10:30 hrs Natural Gas Inventories 02/27 ( NA vs -117 bcf ) Ambarella AMBA ( 0.46 vs 0.68 ) Broadcom Intl AVGO 2.31 H & R Block ( -0.24 vs -0.13 ) Ladder Capital LADR ( 0.45 vs 0.32 ) Mentor Graphics MENT ( 0.47 vs 1.09 ) Planet Fitness PLNT ( 0.15 ) Smith & Wesson SWHC ( 0.40 vs 0.20 ) The Fresh Market TFM 0.48 vs 0.55 |
| FRIDAY | Big Lots BIG ( 1.98 vs 1.76 ) Liberty Tax TAX ( 0.35 ) Staples SPLS 0.28 vs 0.31
08:30 hrs Nonfarm Payrolls Feb ( 190K vs 151K ) Nonfarm Private Payrolls Feb ( 180K vs 158K ) 08:30 hrs Unemployment Rate Feb ( 4.9% vs 4.9% ) Hourly Earnings Feb ( +0.2% vs +0.5% ) 08:30 hrs Average Workweek Feb ( 34.6 vs Same ) 10”00 hrs Trade Balance Jan ( -$44.0B vs -$43.4B ) Dimension Therapeutics DMTX ( -0.38 ) |
Market Strategies Fundamentals
The stock market rallied for the second week consecutively following excellent economic reports, much more bullish than expected, and caused a rally into heavy overhead resistance. Friday’s GDP report, as outlined below in the economic section, was excellent. In addition on Friday, the Commerce Department said January consumer spending rose 0.5%, the best gain in 10 months.
The combination of Personal Income and Spending both rising 0.5% in addition to the bullish GDP called into question the possibility that the Fed might move to increase rates March 16th at their ominous meeting feared by the markets. This possibility caused a turnaround in the markets which fell after making substantial new highs in early trading.
The Nasdaq was the best performer up a second week, another 1.91% to 4590.47 which when added to its 3.85% gain the previous week made a total gain of 5.76% for the two weeks. Resistance looms just above at the 4680 level, its 50-day moving average. Both the Dow and S&P 500 crossed and closed above their 50-day MA’s. The Dow gained 666 points the last two weeks or 4.33% while the S&P 500 gained 83 points or 4.42% during the same period. Volume was heavier on the advances than the declines with fewer stocks making new lows.
In the United States, S&P 500 companies had earnings in the fourth quarter of 2015 that were 3.5 percent below the fourth quarter of 2014. The decline was led by a 74.5 percent collapse in energy companies’ profits, which was driven by falling oil prices; So, as expect; utilities, industrials and materials companies also saw declines. Société Générale (OTCPK:SCGLY) reported that “earnings estimates for the whole of this year for the constituents of MSCI World index, the main benchmark for developed markets, are 12 percent lower than they were last summer.”
Gilead Sciences (NASDAQ:GILD: $ 88.10 ) Has taken much flak for not doing a significant acquisition since it bought Pharmasset for $11 billion in 2011, but is now in the catbird’s seat.
The reticence of the company to make purchases as it has been pushed by many analysts for some time now looks like a virtue. While AbbVie (NYSE:ABBV) was purchasing Pharmacyclics (NASDAQ:PCYC) for $21 billion and Celgene (NASDAQ:CELG) was spending over $7 billion to buy Receptos (NASDAQ:RCPT) this summer, Gilead has quietly sat on its hands.
Given that AbbVie and Celgene could have in all likelihood acquired these companies at much cheaper prices if they would have waited until now, Gilead is looking smarter by the minute. The company has been using its rapidly increasing cash flow to buy back its own stock which looks like probably the best purchase it could make over the last year. The Gilead is quietly making a bottom and appears to be a position buy between $ 82 and $ 85 per share. It is doing a lot of work in and around its 13-day moving average and should outperform other members of the IBB. If it holds the 13 Day MA it is a buy. It is a possible cup and handle pattern.
Market Strategies Economic Data
ECONOMICS: Both Durable Goods and GDP make surprising Gains
Durable goods orders jumped 4.9% in January (Briefing.com consensus 2.0%) on the heels of an upwardly revised 4.6% decline (from -5.0%) in December. Excluding transportation, orders rose 1.8% (Briefing.com consensus +0.4%) after declining an upwardly revised 0.7% (from -1.0%) in December.
U.S. GDP growth for the fourth quarter was revised up to + 1.0% and personal income and spending grew at 0.5% in January.
The January upturn followed on the back of month-over-month declines in both November and December. On a year-over-year basis, durable goods orders are up just 0.6%.
The durable goods orders data are notoriously volatile due to the influence of aircraft and defense spending. Both played a big part in driving the January turnaround. Orders for nondefense aircraft and parts surged 54.2% after a 29.1% decline in December while orders for defense aircraft and parts increased 84.8% following a 66.8% decline in December. New order gains, however, were seen in a host of areas, including primary metals (+0.7%), fabricated metal products (+1.6%), and machinery (+6.9%).
The strength in January could simply be a rebound from a depressed base of order activity. We’ll know more when the February report is released. For now, it can be seen as encouraging news, particularly since nondefense capital goods orders excluding aircraft — a proxy for business spending — increased 3.9%. The one damper on things is that shipments of these goods, which factor into GDP computations, declined 0.4%.
| Category | JAN | DEC | NOV | OCT | SEP |
| Total Durable Orders | 4.9% | -4.6% | -0.5% | 2.8% | -0.8% |
| Less Defense | 4.5% | -2.5% | -2.0% | 3.0% | -1.6% |
| Less Transport | 1.8% | -0.7% | -0.5% | 0.5% | -0.1% |
| Transportation | 11.5% | -12.1% | -0.5% | 7.6% | -2.2% |
| Capital Goods | 20.4% | -17.5% | -2.3% | 10.9% | -4.3% |
| Nondefense | 21.6% | -14.1% | -7.9% | 12.0% | -6.0% |
| Nondefense/nonaircraft (core cap gds) | 3.9% | -3.7% | -1.1% | 0.6% | 0.5% |
| Defense Cap Goods | 11.9% | -35.6% | 45.6% | 2.1% | 10.7% |
Treasuries were weaker on Friday on the better than expected GDP report and better than expected personal income and spending. The postponed 7-year Treasury auction was net with lackluster demand 2.3 basis points below expectations. The high yield was 1.568% bid-to cover 2.25.
Fed Governor Brainard ( FOMC voter ) said that headwinds mean Fed funds will take a lower path than expected and that policy divergence among major nations may be limited.
Fed Governor Powell ( FOMC voter ) made some abstract remarks about time-based and data-dependent guidance inevitably causing some confusion for Fed watchers but he did not comment on how present market turmoil may have affected his economic outlook and forecast for interest rates.
Michigan sentiment was finalized at 91.7.S
GDP increases at 1.0%, more than double previous estimates: The second estimate indicates fourth quarter GDP increased at an annual rate of 1.0% (Briefing.com consensus 0.4%) versus the advance estimate of 0.7%. The GDP Deflator was revised up to 0.9% (Briefing.com consensus 0.8%) from 0.8%.
The upward revision was basically the result of private inventory investment decreasing less than previously estimated. With the advance estimate, the change in inventories subtracted 0.45 percentage points from GDP growth, yet the second estimate showed a drag of only 0.14 percentage points. Final sales of domestic product, which exclude the change in private inventories, were unchanged at 1.2%.
The drag from net exports was also less as it subtracted 0.25 percentage points from GDP growth versus 0.47 percentage points in the advance estimate.
Personal spending saw a slight downward revision to 2.0% growth with the second estimate versus 2.2% in the advance estimate. That downtick was led by lower spending on durable and nondurable goods.
| Category | Q4 | Q3 | Q2 | Q1 | Q4 |
| GDP | 1.0% | 2.0% | 3.9% | 0.6% | 2.1% |
| Inventories (change) | $81.7B | $85.5B | $113.5B | $112.8B | $78.2B |
| Final Sales | 1.2% | 2.7% | 3.9% | -0.2% | 2.1% |
| PCE | 2.0% | 3.0% | 3.6% | 1.7% | 4.3% |
| Nonresidential Inv. | -1.9% | 2.6% | 4.1% | 1.6% | 0.7% |
| Structures | -6.6% | -7.2% | 6.3% | -7.6% | 4.2% |
| Equipment | -1.8% | 9.9% | 0.3% | 2.3% | -4.9% |
| Intellectual Property | 1.3% | -0.8% | 8.3% | 7.4% | 6.9% |
| Residential Inv. | 7.9% | 8.2% | 9.4% | 10.1% | 9.9% |
| Net Exports | -$556.8B | -$546.1B | -$534.6B | -$541.2B | -$463.6B |
| Export | -2.7% | 0.7% | 5.1% | -6.0% | 5.4% |
| Imports | -0.6% | 2.3% | 3.0% | 7.1% | 10.3% |
| Government | -0.1% | 1.8% | 2.6% | -0.1% | -1.4% |
| GDP Price Index | 0.9% | 1.3% | 2.1% | 0.1% | 0.1% |
Market Strategies Cycles
The Stock Trader’s Almanac has markets rising early in the month and lower stocks at mid-month to
End of the month. Julius Caesar failed to heed the famous warning to “beware the Ides of March” but investors would be served well if they did. Stock prices have a propensity to decline, sometimes rather precipitously, after mid-March. This year has been abnormal, stocks falling when they should be strong on January and rallying in February when they often end the month weak.
March packs a rather busy docket. It is the end of the first quarter, which brings with it Triple Witching and an abundance of portfolio maneuvers from The Street. March Triple-Witching Weeks have been quite bullish in recent years. But the week after is the exact opposite, DJIA down 17 of the last 28 years—and frequently down sharply for an average drop of 0.3%. Notable gains during the week after for Dow of 4.9% in 2000, 3.1% in 2007, 6.8% in 2009, and 3.1% in 2011 are the rare exceptions to this historically poor performing timeframe.
Normally a decent performing market month, March is just average in election years with advances 62.5% of the time with a 0.6% average DJIA gain since 1952. S&P 500 has also advanced 62.5% of the time since 1952, but gains have been slightly better at 0.8%, on average. NASDAQ has not fared well in March in election years since 1972. Due to a 17.1% loss in 1980, March is NASDAQ’s second worst month of the election year. Similarly, March 1980’s steep losses adversely affect Russell 1000 and Russell 2000 indices, sending the month to second worst in election years
Psychological: Very Bearish. According to the most recent Investor’s Intelligence Advisor Sentiment survey, bearish advisors have been the majority even though their number has declined slightly from 39.8% two weeks ago to 37.8%, 35.7% and 31.4% this week. Bearish sentiment had nearly reached the level from the fall of 2011 in mid-February. At that extreme a bounce was likely and occurred. Further market follow through is likely needed for bulls to regain their lost confidence.
Fundamental: Resilient. The U.S. labor market continues to make gains even as the global macro picture is tepid. The U.S. Unemployment Rate slipped to 4.9% in January as 151k new jobs were added. Corporate earnings could see some relief from the strong U.S. dollar headwind in Q2 and beyond, provided the dollar remains range bound. Commodity and energy prices are still a drag for suppliers, but not so much for consumers. If oil can find stability, which it looks like it is trying to do, the outlook for commodity and energy suppliers would also improve.
Technical: At Resistance. Dow Jones Transportation DJIA, NASDAQ, RUSSELL 2000 and S&P 500 have managed to poke through resistance around their respective early February highs. The Tranny resistance is heavy right at the December lows-resistance from right here at 7400 to 7750 the 13 Day moving average. Nasdaq and Russell still lag the Dow. No meaningful move higher from current levels can occur without their participation. The current bounce has also pulled Stochastic, relative strength and MACD indicators near overbought levels.
Monetary: 0.25-0.50%. Next Fed meeting is March 15-16 and it includes the Summary of Economic Projections and a press conference by the Chair-lady Yellen, who is hell-bent to raise interest rates. Based upon CME Group’s Fed-Watch Tool, there is currently just an 8% probability of a rate hike at this meeting. Interest rates are still historically low, just not as low as they are in other places or even the recent past. Overall, policy is becoming less accommodative; this, the prospect of high rates and stronger dollar is by far the worst problem facing stocks.
Seasonal: Bullish. Normally a decent performing market month, March is just average in election years with advances 62.5% of the time with a 0.6% average DJIA gain since 1952. S&P 500 has also advanced 62.5% of the time since 1952, The Russell and Nasdaq need to regain their seasonal leadership if the market are to continue their advance. The Transportation Average has been a good performer but has stalled at just below their December lows. March has been NASDAQ’s second worst month of the election year (since 1972). It is also the Russell 1000 and Russell 2000 second worst month by average performance in election years (since 1980).
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Undervalued Small Cap Stocks
Lower Priced stocks that look to be a buy:
Repro-Med Systems, Inc ( OTCQX: REPR 0.55 )*
Repro Med Systems, Inc. dba RMS Medical Products (OTCQX: REPR) has been one of the best performing stocks in 2016.
They announced that its net revenues for the third quarter ended November 30 for fiscal 2016 increased 18% over the previous year’s Q3, led by the Company’s sales of proprietary infusion products. The Company’s current fiscal year ends February 29, 2016.
Revenues for the third quarter of fiscal 2016 were $3,145,000 compared with $2,655,000 for the third quarter of fiscal 2015. Revenues for the first nine months of the fiscal 2016 were $8,942,000 compared with $7,797,000 for the same period last year, an increase of 15%.
RMS continues to benefit from recent lean manufacturing initiatives, which have resulted in increased capacity and decreased direct assembly labor costs compared to last year. Gross margin improved in fiscal Q3 to 67% from 60% in the same quarter last year, and from 63% in fiscal Q2.
Driven by the strong sales in the quarter, net income for the third quarter was $168,000, an improvement of 81% compared with the same period last year. In addition, net income was negatively impacted due to costs associated with several trade shows in the quarter, the hiring of new sales representatives, and continued legal and consulting fees, all of which reflect an investment for growth in future periods. Excluding certain of these non-recurring items, net income margin would have been in excess of 10% for the quarter.
“We continue to see growth in all sectors of the homecare infusion market both domestically and internationally,” commented Andy Sealfon, President and CEO of the company. “I am also very excited about our newest board member, Cyril N. Narishkin and have appointed him as Interim Chief Operating Office to support our expanded management team and accelerate our growth opportunities. Cyril brings a wealth of experience consulting with companies of all sizes, and will also be instrumental in assisting the Company on its lean initiatives and growth plans,” Mr. Sealfon added.
The Company manufactures medical products used for infusions and suctioning. The Infusion product portfolio currently includes the FREEDOM60(R) and our latest FreedomEdge(TM) Syringe Infusion Pumps, RMS Precision Flow Rate Tubing(TM) and RMS HIgH-Flo(TM) Subcutaneous Safety Needle Sets. These devices are used for infusions administered in professional healthcare settings as well as at home. The company’s RES-Q-VAC line of medical suctioning products is used by emergency medical service providers in addition to a variety of other healthcare providers.
The Company’s website may be visited at www.rmsmedicalproducts.com.
Repro-Med Systems, Inc has had an increase in sales each of the last four years. They finished the year of 2014 with $ 11.2 million in sales reflecting top line growth of 29% from 2013.In each of the previous two years they had a 12% increase in sales. The company has had at least $ 700 thousand of net income in each of the past four years and has no debt. The patented needle sets alone can give the company a huge growth potential. In my opinion, with new products coming on stream, the stock should trade between $ 3 and $ 8 in the next two years.
Immune Therapeutics ( OTCQB: IMUN $ 0.18 )*
Use of Naltrexone as an immune modulator was recognized by Dr. Ian Zagon at the University of Pennsylvania.2,3 The late Dr. Bernard Bihari, a Neurophysician from New York, USA (who passed away on May 16th, 2010) began treating his patients in the late 1980s4,5. Since that time, many doctors throughout the United States prescribe LDN for a number of indications including Multiple Sclerosis (MS), Parkinson’s disease, Crohn’s disease, HIV/AIDS, cancer and other autoimmune and inflammatory diseases. A number of research and clinical trials have been completed and undergone in regards to LDN immunotherapies, with phase I and phase II clinical trials successfully run at a number of universities in the United States and Europe, including Pennsylvania State University Medical School at Hershey; University of Chicago; State University of New York; SUNY Upstate Medical University; London Health Sciences Centre – University Hospital, USA; Alpert Medical School of Brown University; Department of Neurology, San Raffaele Scientific Institute; Division of Rheumatology, St. Louis College of Pharmacy; Department of Internal Medicine, University of Utah; Jondi-Shapoor University of Medical Sciences; Department of Psychiatry & Behavioral Sciences, Duke University Medical Center; and Multiple Sclerosis Center at UCSF6. These efforts were pioneered by leading immunologists Dr. Nicholas Plotnikoff, Dr. Ronald Herberman, Dr. Bernard Bihari, Dr. Angus Dalgleish, Dr. Ian S. Zagon, Dr. Jill Smith, Dr. McLaughlin, Dr. Jacqueline McCandless, and Moshe Rogosnitzky, among others.
Oakridge Global Energy Solutions, Inc. ( OTCQB: OGES $ 0.79 ) *
Oakridge global energy is a developer, designer and manufacturer of proprietary energy storage solutions. The Company is based out of Florida’s “space coast” near Kennedy space Center. They make premium quality, proprietary batteries, battery systems and lithium ion cells that are built for maximum performance over the traditional lead/acid batteries. OGES, proudly manufacturing in America since 1986, produces batteries for military, consumer, government, and industrial applications. Target market priorities include golf cars and other recreational vehicles, electronics, and devices requiring rechargeable batteries.
Oakridge Energy produces highly reliable, sustainable and dependable batteries for mobile power sources. Based on size and weight, OGES products deliver a higher capacity then comparable competitor batteries. OGES batteries are higher in quality, longer lasting and safer to use. These batteries have undergone and passed rigorous military testing in underwater and aerial vehicles proving to be high/low pressure tolerant. Most significant, OGES batteries are superior performing yet competitive in the market.
Martac Maritime Tactical Systems, Inc., MARTAC recently conducted very successful field trials on the Intercoastal waterway in Palm Bay, Florida. MARTAC is a Melbourne, Florida based company that designs and produces the Man-Portable Tactical Autonomous Systems (MANTAS) that can reach extreme high speeds and operate anywhere in the world. These vehicles are designed to be used in numerous applications including naval fleet protection, mine warfare, port and harbor security patrol, antipiracy, search and rescue, and many others.“shows our high quality and high performance gets us into the military space at a time when made in USA is of critical strategic importance.
Freedom Trucks shows that Oakridge can outperform Tesla and the “Tesla of trucks” – trucks are much more difficult and laborious to power than cars – because of the Oakridge high power high energy dense batteries, we need only 180 OGES batteries to power the interstate truck that pulls an 80,000 lb trailer, whereas it would take 208,000 Tesla/Panasonic batteries, which is simply not feasible.
Lithium ion batteries, deliver twice the energy of nickel cadmium batteries and are the fastest growing battery segment. Their growth and demand dynamically forward trending. They are lightweight and easy to maintain. They deliver superior electro-chemical output and provide highest energy density for weight, non-metallic and are rechargeable. In 2015, the OGES ProSeries golf car was launched at the annual PGA show, the largest golf show in the world. OGES plans to have a new factory producing its patented thin film solid state lithium ion batteries by 2017. OGES is commencing delivery of small format prismatics to help several smart card customers reach the next generation. Their growth will be serviced by the new factory. These batteries are also in a rapidly growing demand for a variety of p loss 11.36.applications.
Oakridge has recently continued expansion of its ISO certified manufacturing facility and warehouse in Palm Bay, with the support of Florida Governor Rick Scott. The new facility represents a $270 million investment, increasing the size of the manufacturing plant to 70,000 sq-ft to accommodate the growing demand for OGES batteries. Production is expected to increase from 250,000 to 25 million cells per year by 2018. The company’s growth will provide 1000 Americans with new jobs; this is part of the company’s commitment to support domestic employment.
Overseas, Oakridge Global Energy Solutions Limited (Hong Kong) is a subsidiary company that operates for sales and service in Asia.
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Fundamental Analysis Stocks To Buy with Stops
Using fundamentals the following are stocks to buy and they have done well. Now it is your decision whether to take profits in these uncertain times.
Last week we discussed Sunoco in the Fundamental section. We bought this stock which was seriously undervalued.
We added Harley Davidson to our buy list.
Enzo was bought last week for a lower price to buy. We had originally bought at $ 2.78, now at 4.15. It is by no means a lock.
Church and Dwight is looking solid and should be bought any two days down.
Alcoa is very cheap and a reasonable value. Buy dips.
The HDGE has been a major success for those who believe in hedging. It was bought last week at our limit price of 11.62 stop loss placed at 11.36, a break below the 13 day M.A.
| Symbol | Name | Business Description | PE | P/S | MV mln | Price | Buy Limit | Stop Loss
Or sold |
| FFIC | Flushing Financial | Bank Holding company Savings and loans | 13 | 3,5 | 592Mln | 20.91 | 19.50 | 18x |
| SUN | Sunoco | Oil and Gas Refining and marketing | 10 | 0.2 | 2.1B | 30.82 | 26 | 23.50x |
| AA | Alcoa | Aluminum Processing and Technology | N/A | 0.4 | 9.5B | 8.87 | 7.05 | 6.97X |
| SBH | Sally Beauty Holdings | Specialty Retailer and distributor beauty supplies | 16 | 1 | 4B | 31.65 | 27.30 | 26x |
| HOG | Harley Davidson | Motorcycles and related products | 11 | 1.32 | 8B | 43.38 | 39.84 | 36x |
| CHD | Church & Dwight | Consumer Products Sodium bicarbonate Arm and Hammer | 25 | 3 | 10.6B | 91.70 | 79.80
01/26/16 |
Take Profits |
| T | AT&T | Communications | 36 | 1.54 | 211.7B | 37.13 | 34.10 | 32x |
| MSFT | Microsoft | Technology Software, Services, Devices | 17 | 4.7 | 431B | 51.30 | 50.90
|
49.50x |
| KR | Kroger | Food Mfg and Processing | 18 | 0.33 | 37B | 39.45 | 36.76
11/16 |
36.60x |
| VA | Virgin Air | Regional Airlines | 7.2 | 0.9 | 1.5B | 30.92 | 30.30
Suggested buy |
28.50x
|
| ENZ | Enzo Biochem | Life Sciences | NA | 1.35 | 134M | 4.23 | 4.15
Suggested buy |
3.98x |
| BAC | Bank of America | Commercial Bank | 10 | 2.02 | 165.3B | 12.70 | 11.86 | 10.90x |
| HDGE | Advisor Shares | Ranger Bear ETF | 11.66 | Buy 11.62 | 11.36x |
Rule 17B Attestations and Disclaimers
Princeton Research, Inc. has approximately 2,581,578 shares of AIVN both free and restricted and represents them for Investor relations. Princeton also has about 40,000 shares of TXGE. Princeton is paid $ 1,500 per month from RMS Medical Products. Princeton has bought 81,100 shares of RMS Medical Products. Princeton was paid $ 2,500 to write a report on Xinergy. Princeton has signed a contract with CBLI to be paid $ 2500 for July and August for investor relations. Princeton has been engaged by Target Energy. No contract is currently in place. Princeton was paid about 500,000 restricted shares of Leo Motors.
When there is no movement in penny stocks, even though there is none or very small losses, we will liquidate ( sold AIVN on stop ) even though we like the company, if money is needed for better opportunities.
We now believe REPR represents upside opportunity. The Target ADR trades at about $ 4.50 in U.S. vs 0.05 in Australia. Princeton owns 400,000 Australia shares and about 900 U.S. ADR’s.
Pursuant to the provisions of Rule 206 (4) of the Investment Advisers Act of 1940, readers should recognize that not all recommendations made in the future will be profitable or will equal the performance of any recommendations referred to in this e-mail issue. Princeton may buy or sell its free-trading shares in companies it represents at any time.
CONTACT
Please Direct All Inquiries To:
Mike King
(702) 650-3000
Charles Moskowitz
(781) 826-8882
Princeton Research
3887 Pacific Street, Las Vegas, Nevada 89121
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